Answer:
correct option is b. $36
Explanation:
given data
bought = $1,000 par convertible
convertible into common = $32 per share
bond market price increases = 12.5%
solution
we know that conversion ratio is fixed when the convertible security are issued and it does not change
we have bond is issued with a conversion price = $32
so as per each bond converting conversion ratio will be
conversion ratio = = 31.25 : 1
so by every bond which is converted , then receives = 31.25 share
so now bond price will be = $1125
parity price of the stock will as =
parity price of the stock = $36
correct option is b. $36
Answer:
Cost to increase production is $733.6
Explanation:
We have given marginal cost
Fixed cost = $8400
So total cost
Cost of 310 items
Cost of 530 items
So the cost increases production is $9712.8 - $8979.2 = $733.6
Answer:
First Offer
Present value = $60,000
Second Offer
PV = Down payment + A<u>(1 -(1 + r/m)</u>-nm
r/m
PV = $10,000 + $6,000(<u>1- (1+ 0.06/2</u>))-5x2
0.06/2
PV = $10,000 + $6,000(<u>1 - (1 + 0.03</u>))-10
0.03
PV = $10,000 + 6,000<u>(1 - (1.03)</u>)-10
0.03
PV = $10,000 + 6,000(8.5302)
PV = $61,181
The difference between the two present values
= $61,181 - $60,000
= $1,181
Explanation:
The present value of the cash payment is $60,000. The present value of the second offer is the down payment plus the present value of semi-annual payments. We need to use the present value of annuity formula so as to determine the present value of semi-annual payments. Then. we will deduct the present value of the first offer from the present value of the second offer in order to obtain difference in present values.
I would say that it would be the <u>rate of return</u> but i might be wrong